21 February 1996 External T.I. 9604135 - DISABILITY RELATED EQUIPMENT

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

With respect to a business, a taxpayer purchases a device which would be attached to a building or a sign. It is intended that the device transmit business information to customers who have a reading or sight impairment. Such an individual would have his or her own device which would receive the transmitted information. Does the device qualify for deduction under paragraph 20(1)(rr) of the Income Tax Act.

Position:

no

Reasons:

To qualify for deduction under paragraph 20(1)(rr), the device must be described in section 8801 of the Income tax Regulations. The device is described in those regulations..

		960413
XXXXXXXXXX	M. Eisner

Attention: XXXXXXXXXX

February 21, 1996

Dear Sirs:

Re: Disability-Specific Devices

This is in reply to your letter of January 12, 1996 concerning whether the cost of a certain device being developed could be claimed as an expense for income tax purposes. We also acknowledge our telephone conversation (Eisner/XXXXXXXXXX) on February 8, 1996.

In order for a taxpayer to obtain the Directorate's position on a proposed transaction, including the contemplated acquisition of a capital asset, it is necessary for the taxpayer to submit an advance income tax ruling request pursuant to Information Circular 70-6R2 and the related Special Release copies of which have been enclosed. We are, however, providing you with the following general comments.

You are concerned with the type of situation where a device would be attached to a building or a sign. It is intended that the device would transmit information about a business to customers who have a reading or sight impairment. Such an individual would have his or her own device which would receive the transmitted information. The concern is whether the device that would be purchased and attached to a building or sign could be deducted under paragraph 20(1)(rr) of the Income Tax Act.

In relation to these circumstances, the general rule is that, where a taxpayer purchases a tangible capital asset, the taxpayer is not entitled to deduct the cost of the asset, except as permitted, while other rules permit a taxpayer to claim such part of the capital cost as is allowed by regulation. One of the exceptions to this treatment is set out in paragraph 20(1)(rr) of the Income Tax Act. Under this provision, a taxpayer is entitled to deduct an amount paid after February 25, 1992 for prescribed disability-specific devices or equipment in computing income from a business or property. The eligible devices or equipment, which are described in section 8801 of the Income Tax Regulations, include (a) a visual fire alarm indicator, (b) an elevator car position indicator for those with a sight impairment, (c) a listening device for group meetings or a telephone device, for individuals having a hearing impairment, and (d) disability-specific computer software and hardware attachments. Consequently, it is our view that a device whose function is to transmit a message (general information about a business) to a potential customer who has a reading or sight impairment would not qualify for deduction under paragraph 20(1)(rr) of the Act.

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch